What Is a CWCOT Auction? 🏚️💸
If you invest in distressed real estate in New Jersey or help clients who do, there’s a little-known strategy you need to have on your radar: CWCOT.
CWCOT stands for Claims Without Conveyance of Title, a HUD program that allows mortgage servicers to sell foreclosed homes after the sheriff sale fails but before they transfer the deed to HUD. These properties go to a second auction, usually online, where they’re sold as-is, cash-only, no contingencies, and often well below market value.
If that sounds like a goldmine for experienced investors or cash buyers, that’s because it is.
Why You Haven’t Heard Much About It 🤔
CWCOT auctions fly under the radar because they’re not part of the MLS or the usual REO pipeline. In fact, most real estate agents have never represented a buyer or seller in a CWCOT transaction. But that’s exactly why there’s opportunity.
These auctions typically happen on platforms like:
You won’t find them advertised on Zillow, Redfin, or your local MLS feed. And the homes themselves? They’re often:
- Vacant and in need of repair 🧰
- Still occupied (so access is limited)
- Sold with no title warranty or interior access 🚪
How CWCOT Auctions Work 🏦🔨
- A New Jersey homeowner defaults on their mortgage.
- The home goes to sheriff sale but does not attract a high enough bid.
- The mortgage servicer evaluates whether to convey the property to HUD.
- If HUD’s criteria are met, the servicer can instead list it in a CWCOT auction.
- The home is auctioned off online, usually to the highest cash bidder.
- The buyer must close quickly, often within 30 days or less, and handle any title or occupancy issues.
HUD often applies additional price reductions to stimulate bidding. That means these properties sometimes sell at 60% to 80% of market value, depending on location, condition, and title complexity.
Why It Matters in New Jersey 🏘️📉
Inventory is tight. Traditional REOs are scarce. And distressed sellers are more likely to take cash offers than let their homes go to auction. But when they do, and the home fails to sell at the courthouse, CWCOT is the final stop before HUD takes it over.
In a state like New Jersey, where foreclosure timelines can drag on for months or years, CWCOT auctions offer a more efficient, transparent path to acquisition.
Plus:
- Servicers benefit by avoiding the cost of transferring the deed to HUD 💼
- Communities benefit from faster turnover and reduced vacancy 🏙️
- Investors benefit by getting access to discounted properties without MLS competition 📊
Who Should Pay Attention to CWCOT? 🧠📣
If you’re one of the following, CWCOT auctions should be on your radar:
- Cash Buyers looking for underpriced deals 💰
- Real Estate Agents working with investors or flippers 🏡
- Wholesalers who need inventory to assign 🔁
- Landlords expanding their portfolio 🏢
- Probate Professionals or Attorneys trying to advise heirs on options 📑
How Wholesalers Benefit:
Wholesalers thrive on sourcing discounted properties and assigning contracts to end buyers for a fee. CWCOT auctions can be a powerful inventory source. Here’s how:
- These homes are not on the MLS, meaning less competition 🚫📋
- Wholesalers can build relationships with auction buyers who need help selling or flipping 🤝
- Some wholesalers use transactional funding to buy the auction property, then immediately resell to their cash buyer list ⚡
- With deep local knowledge, a wholesaler can uncover post-auction resale opportunities by solving title or occupancy challenges the average investor might avoid 🧩
It is not a traditional wholesale play, but for resourceful operators who can handle speed, risk, and due diligence, CWCOT can be a serious niche.
Where to Find CWCOT Auctions in New Jersey 🔍
Start with these platforms:
- Auction.com: Search by county or zip code, filter for HUD or CWCOT properties
- Xome.com: Look for HUD-owned or lender-directed auctions
- HudsonAndMarshall.com: Occasionally lists NJ CWCOT opportunities
Also, monitor:
- Bergen, Passaic, Essex, and Union County sheriff sales. Properties that do not sell are likely to move into the CWCOT pipeline.
- The HUD Mortgagee Letter archive, where policy updates are posted.
- New Jersey foreclosure tracking tools or subscription databases.
Important Caveats ⚠️
- No inspections. These are sold as-is, sight unseen in most cases.
- Cash only. No financing means limited competition but higher risk.
- No title insurance provided upfront. Do your due diligence on liens.
- No agent commissions are guaranteed, but some platforms offer buyer agent referral fees.
Want to Be Notified of New CWCOT Deals in NJ? 📩📲
At New Jersey House Partners, we track preforeclosures, sheriff sales, and off-market deals, including CWCOT opportunities that fly under the radar. If you’re a cash buyer, flipper, or landlord looking for second-chance auction deals in Bergen County or beyond, get on our list.
You’ll receive:
- Alerts when second-chance foreclosures hit auction 🚨
- Market insights on pricing trends and rental demand 📈
- Help evaluating whether a property fits your strategy 🎯
Final Thoughts 🧾
CWCOT auctions are not for beginners. They require speed, confidence, and cash. But for the right investor, or the savvy agent who works with them, they offer a rare window into the distressed real estate world after most people stop paying attention.
If you want in on the second chance before HUD takes over, start watching CWCOT auctions. Or better yet, work with someone who already does.
